The Goldilocks Curse: How America's Job-Creation Story Got So Boring

Each month, the Bureau of Labor Statistics reports the previous month's job numbers. Each Jobs Day, the economic followers get very, very excited—as well we should. Employment is the beating heart of an economy. It's the point of growth. But in the last few years, something happened to this growth story that's difficult to express, as a journalist, because we're really not supposed to use the word I'm about to use.

Job growth became boring. Not the issue, but the story.

Let's draw the camera lens back to early 2009, the first year of Obama's presidency, and the nadir of our employment recession. When you look at our month-by-month job figures, they're spiky like a silhouette of stegosauruses standing head to tail. Particularly that big jump and fall in 2010 due to temporary Census workers. This story doesn't look so boring. In fact, it looks unpredictable.

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But monthly numbers offer a lot of noise that drown out the trends. And the trends haven't been spiky at all. When you take a running-four-month-average of job numbers, the results are rather languid going back to 2011. It got back to averaging 150k-200k jobs per month, and we've sort of sat there for three years.

But even that smoothness might be too turbulent.

For the last few years, the Bureau of Labor Statistics has probably been over-counting jobs in the winter and under-counting jobs in the summer due to a seasonal adjustment error that goes back to the fall of Lehman Brothers. We can correct this somewhat by extending the four-month-running average to six months. And you get this positively serene picture of job creation since 2011. It is as if the Federal Reserve set a job-creation thermostat to 165k at the end of 2010 and just left it there.*

Serenity sounds nice, but it's not what economists or families should hope for. Steep recessions require, and typically lead to, steep recoveries. But the labor market has experienced neither terrific gains nor terrific crashes in the last three years. Instead, we've suffered the Curse of Goldilocks: Just fine enough to keep pressure from building in Washington for another round of intervention. Proposals from the Obama administration, Democrats, and Fed doves to offer more stimulus for the labor market failed to gain much local, or national media, attention. (There are many reasons why, from partisan differences in Congress to mysterious inflation and bond-buying concerns in the Fed, but in both cases, the lack of emergency communicated by jobs numbers probably played a role, at the margins.)

The strange thing is that the job recovery has been thermostatic even as the conditions underneath the labor market changed dramatically. The housing sector was dead as an Arizona tumbleweed, and now it's roaring back across parts of the Sun Belt. Europe nearly collapsed into a second financial depression, and then it didn't. We nearly defaulted on our debt twice, and then we didn't. We got a payroll tax break, and then we lost it. We shed 20,000 public jobs a month for more than a year, and then government austerity lessened. The Fed announced two rounds of quantitative easing, then told everybody it would reel in its support, then changed its mind. Everything has changed! Everything, it would seem, except the six-month rolling average of American job creation.

* In fact, that was the month the Fed announced QE2. QE3 would follow a little less than two years later. The thermostat effect is no illusion: It's the Fed's mandated job to regulate the temperature changes to employment and inflation.